Could Saudi-Turkish rapprochement save Turkey's ailing economy?

On the plane home from a landmark visit to Saudi Arabia last week, Turkish President Recep Tayyip Erdogan said we would see "a new era" in what have in recent years been lukewarm Saudi-Turkish relations.

His visit - the first to the kingdom since 2017 - comes as his country is gripped by an economic crisis.

Inflation hit 70 percent in April, the highest in Turkey since his AK Party came to power in 2002. The country is also suffering from the economic fallout of the Russian invasion of Ukraine being seen worldwide, with food security a major concern.

As Turkey gears up for a general election in 2023, the centenary of modern Turkey's establishment, the economic decline is hurting Erdogan's popularity. He desperately needs foreign investment in the country.

Erdogan said after the meeting that Saudi Arabia and Turkey could cooperate in defence, energy and food security, among other fields.

So could Saudi Arabia be the Turkish economy - and Erdogan's - knight in shining armour?

Defence

A few days after the Saudi-Turkey meeting, Erdogan said: "we shared our thoughts that some joint steps can be taken with Saudi Arabia, especially for the defence industry".

One particular area of the defence industry that Saudi Arabia might look for Turkish expertise is drones. Despite having an advanced, well-equipped air force, Saudi Arabia has bought remarkably few drones, according to the Royal United Services Institute, a British defence and security think tank. 

Riyadh has bought Chinese drones, and has sought out Chinese expertise to produce its own drones domestically.

Erdogan said last year that Saudi Arabia had shown interest in Turkish drones, and according to United Nations data, Riyadh bought three UAVs from Turkey last year. Turkish analysts citing Saudi sources have said that the kingdom has renewed its interest in purchasing drones since the 28 April meeting.

Turkish drone manufacturing has been very successful, with drones made by private manufacturer Baykar sold to a host of nations. They have been heralded as one of Ukraine's most effective weapons against Russia.

The sale of Turkish drones to Saudi Arabia is a "possibility", Turkey Country Analyst for GlobalSource Partners Atilla Yesilada told The New Arab.

"Turkey’s armed drones proved their mettle in Ukraine and are sold without political conditions," he said.

Energy

Turkey has not joined in any sanctions on Russian energy, a major source. Energy relations between the two countries are strong. While European nations scurry to sign energy deals elsewhere, Turkey looks comfortable where it is.

Turkey - second only to China in terms of growth in energy demand, according to the Turkish foreign ministry, is trying to boost its domestic energy production to meet its own needs and reduce its reliance on other countries.

Investment in Turkish energy infrastructure could be an enticing prospect for Saudi Arabia, Yesilada said.

"Saudi Arabia funding TPAO (state-owned oil and gas exploration company) to discover new ages fields of off-shore in Black Sea and Mediterranean are lucrative prospects," Yesilada said - though he added that Turkey is not currently looking for a new supply of natural gas.

Saudi Arabia buying cheap Turkish downstream energy operation assets - assets in oil refinement and gas processing - could also provide a significant boost to the Turkish economy, Yesilada said.

Food processing and agriculture

Russia's invasion of Ukraine has exposed Turkey's inability to feed itself. The country has been heavily reliant on wheat imports, as well as the fuel and fertilisers needed for farming, from Russia. Like other countries in the MENA region, Turkey has temporarily stopped exports of some foods since the invasion, to stabilise local markets.

Despite its lack of some staple grains, Turkey is a food processing powerhouse. The food and drinks industry is worth approximately $141 billion - about 20% of Turkey's GDP.

"New investments into agriculture and food processing industry would significantly enhance Turkey’s growth prospects," Yesilada said.

Tourism

Turkey’s tourism sector was decimated by the Covid-19 pandemic. The sector reportedly lost $10 billion in the pandemic’s first year, and hundreds of thousands of people lost their jobs in the same time frame.

It bounced back in 2021, thanks to European countries lifting travel restrictions. Russian tourists were a big part of the resurgence.

But Russia’s invasion of Ukraine could well put a stop to the flow of Russian tourists, as sanctions on Moscow by Ukraine’s allies leave Russians without their spending power.

Turkish media has made much of a potential increase in visitors from Saudi Arabia and its main Gulf ally, the UAE. After Erdogan's visit to Saudi Arabia, bookings by Saudi tourists reportedly shot up.

Turkish media reported that Turkey was looking to attract 1.5 million Saudi tourists this year, of an overall target of 45 million tourists. That would be double the number of Saudi tourists Turkey saw in 2018, according to Turkish foreign ministry figures.

“Since the tourism understanding of our brothers coming from Saudi Arabia is very positive, this approach will reflect differently on Turkey. I believe that this tourism season will be very, very positive in Turkey,” Erdogan reportedly said after the Saudi meeting.

Yesilada was less than hopeful that tourism from Saudi Arabia and other Gulf states would be able to stem the Turkish tourism sector's almost inevitable losses.

"Russia, Germany and the UK are the countries that send most tourists to Turkey," he said.

"All tourists are welcome, but Saudi Arabian tourists are merely a drop in the bucket. This goes for all Arab tourism."